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Gold: Another Week of Lost Shine As Dollar Parties Instead

CommoditiesJan 15, 2021 04:42PM ET
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By Barani Krishnan

Investing.com - It’s another week of lost luster for gold at the expense of a charging dollar whose strength could barely be explained with the currency debasement expected from President-elect Joe Biden’s proposed $2 trillion coronavirus stimulus.

U.S. markets swirled in a sea of red toward Friday’s close from woeful December numbers for everything from retail sales to producer price index, manufacturing and consumer sentiment. Joining the doleful party was gold, which was supposed to be the “safe-haven” — or hedge or panacea, whatever you called it — from this.

Gold for February delivery on New York’s Comex settled Friday’s official session at $1,829.90 an ounce, down $21.50, or 1.2%. While the benchmark gold futures contract dipped just 0.3% on the week, that loss added to last week’s slide of 3.2% — handing the precious metal its worst two weeks in a row since November.

Even more remarkable than gold’s slide was the dollar’s stand-alone party amid the gloom across stocks and commodities.

Supposedly a haven in its own right, the Dollar Index, pitted against a basket of six other major currencies, rose 0.6% on the day to show a reading of 90.7. The greenback had started the year at below 90 but could head above 91 by next week, some forex dealers said.

The dollar was an outlier on Friday despite a tumble in bond yields associated with the benchmark U.S. 10-year U.S. note, whose resurgence last week had been the catalyst for the greenback’s comeback.

But what made the whole thing even more bizarre was the dollar’s defiance of the rocketing U.S. deficit and debt forecast from the Biden’s administration’s fiscal plans to fight Covid-19. The $1.9 trillion stimulus announced by the president-elect on Thursday isn't expected be the last for the year, by any long shot.

Typically, when market-propping spending like this is announced by leadership, investors’ risk-on appetite reaches a fever-pitch, sending stocks to commodities, including gold, to highs while the dollar plumbs lows.

Still, there might be reason to Friday’s consternation in markets, with Wall Street musing over talk in Washington’s political grapevine that Biden’s stimulus might still meet resistance in the Senate despite the simple majority that his Democrat Party commands.

Yet, the dollar’s performance — even with the likelihood of a reduced stimulus — bucks logic, especially with Federal Reserve officials spending all week to deny any speculation of a tapering soon in relief measures or an imminent hike in interest rates standing at near zero.

Gold: Another Week of Lost Shine As Dollar Parties Instead
 

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Comments (14)
Ridha B younes
Ridha B younes Jan 17, 2021 5:44AM ET
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Any experts please? anything in European commission announcements next Tuesday onwards that have an effect on gold.? Thanks
Ridha B younes
Ridha B younes Jan 17, 2021 5:44AM ET
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meaning bullish ? yes/ no Flintstones ?
Alan Rice
Alan Rice Jan 17, 2021 5:44AM ET
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Gold is near alltime highs. I am going to sell all my gold jewelry later this week. That should be bearish for the shiny yellow metal. (actually, im no expert.)
Ridha B younes
Ridha B younes Jan 17, 2021 5:44AM ET
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I hope gold price will go up so you can have fair deal Meanwhile thanks Mr Rice for taking the time to answer my question no body knew the answer actually .I have asked because the first time in the year Europe commission meeting can shape up many assets Europe is hurt by England exit and Trump taxing there luxury goods and wines and there you go . Before selling any jewelry practice some gold calculations skills to differentiate the purity levels and the respective prices many apps also can do it for you . It's not safe also to tell many people that you have jewelry , security comes first .Thanks a lot sir you must be expert it gold might be bearish but after Wed meeting or in Monday that only time will tell . stay safe take care sir
Gregor Stojanovic
Gregor Stojanovic Jan 16, 2021 1:25PM ET
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Everything about gold price in this month makes no sense! It goes down when it should go up, like a lot. Obvious manipulation...
Gregor Stojanovic
Gregor Stojanovic Jan 16, 2021 1:25PM ET
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And it's all about saving the dollar because of increasing America's debt. If USD falls further, longer will take for the USA to pay their debt. Logical, but sad for the gold price. What we see is just a manipulation with gold prices just to save USD & USA of big fall...
Ridha B younes
Ridha B younes Jan 16, 2021 1:25PM ET
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Ace Ventura when natural calls. The white bat is scaring the bull and the bear afraid of the porcupine
Ridha B younes
Ridha B younes Jan 16, 2021 1:25PM ET
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possible Europe commission announcements next Tuesday onwards. Any implications on gold. European commission wants tarrifs by U.S. cancelled also big week
Vladimir Charkowy
Vladimir Charkowy Jan 16, 2021 1:25PM ET
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totally agree!!!! but with this irrational market full of beginners who don't know what they are doing, there are no place for safe haven for an explosive market waiting to happen
SunilKumar Dixit
SunilKumarDixit Jan 16, 2021 11:20AM ET
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As for now, yes, Gold is bearish. As the bull run started, It made record high of $2075 and corrected to $1764. While the possibility of further correction to 1700-1650 can not be negated, at the same time, it is very important to be aware that next bull run will take Gold to new heights of $2300-2600.
Luis Angulo
Luis Angulo Jan 16, 2021 5:32AM ET
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Print Money! 🤑💵🤑💵
alex gallegos
alex gallegos Jan 16, 2021 5:32AM ET
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You mean like the Weimar Republic?
Yogendra NK
Yogendra NK Jan 16, 2021 5:32AM ET
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suggest me for gold
Amit Srivastava
Amit Srivastava Jan 16, 2021 2:17AM ET
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With stimulus and low interest rates ,gold prices may raise once again. Also the liquidity in the entire world is high .there is a lot of money sloshing around and the capex cycle also appears to be far away. Just like the bitcoin gold is also available in limited quantity.
Ridha B younes
Ridha B younes Jan 16, 2021 2:17AM ET
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when is gold up Tuesday or next 6 months
Luqman Firdaus
Luqman Firdaus Jan 16, 2021 12:31AM ET
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money $ 780.000
Ridha B younes
Ridha B younes Jan 15, 2021 9:53PM ET
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1 bit coin is how much gold if you don't mind me asking please I can Google it but now I'm here .
Ridha B younes
Ridha B younes Jan 15, 2021 9:53PM ET
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I got now thanks
aye chanmoe
aye chanmoe Jan 15, 2021 9:53PM ET
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Could I ask you sir?How much
Ridha B younes
Ridha B younes Jan 15, 2021 9:53PM ET
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I got my answer thank you sir.
Ridha B younes
Ridha B younes Jan 15, 2021 9:50PM ET
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gold has got electro lite
Zhu Tang
Zhu Tang Jan 15, 2021 7:55PM ET
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Buy BitCoins !!!!
Ryan Grandinetti
Ryan Grandinetti Jan 15, 2021 6:42PM ET
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next leg up is coming *very soon
Barani Krishnan
Barani Krishnan Jan 15, 2021 4:57PM ET
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New order of the world: The safe-haven is now Bitcoin. (* You may comment after you stop laughing)
Alan West
Alan West Jan 15, 2021 4:57PM ET
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Hahahaha. Completely illiquid, something you can’t use anywhere. Like gold.
Ross Dre
Ross Dre Jan 15, 2021 4:57PM ET
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Alan West you can’t jewelry out of gold? That’s really weird! I’m gonna give my spouse a bitcoin necklace tonight.
Ross Dre
Ross Dre Jan 15, 2021 4:57PM ET
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*make jewelry out of gold... everytime my comments make it past the robo moderators here, i cheer.
Vladimir Charkowy
Vladimir Charkowy Jan 15, 2021 4:57PM ET
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you are right. robinhood speculators did it
Irfan Sadiq
Irfan Sadiq Jan 15, 2021 4:34PM ET
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Is worth accumlating Gold at this rate?
Alan West
Alan West Jan 15, 2021 4:34PM ET
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Short answer. No.
Steve Swisher
Swish Jan 15, 2021 4:22PM ET
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Buy all dips. Stimulus coming.
Alan West
Alan West Jan 15, 2021 3:46PM ET
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Gold is the worst bet ever right now.
Show previous replies (5)
Philip Balvanz
Philip Balvanz Jan 15, 2021 3:46PM ET
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Vic riv, couldn't agree more! With bitcoin mining profitable again, demand is up for hardware in that sector as well, so add that to the list of positives for gold.
Shaun Izatt
Shaun Izatt Jan 15, 2021 3:46PM ET
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Just wait!!!!
Shaun Izatt
Shaun Izatt Jan 15, 2021 3:46PM ET
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Just wait!!!!
Ross Dre
Ross Dre Jan 15, 2021 3:46PM ET
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Philip Balvanz i second the kudos for Vic. Computers processors and various have gold & silver components.. plus, it’s used in this newer idea called jewelry.
Ridha B younes
Ridha B younes Jan 15, 2021 3:46PM ET
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gold has got electro lite
 
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